TMI Blog1987 (7) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... - This appeal by certificate has been carried by the Revenue challenging the decision rendered by the Gujarat High Court reported in CIT v. Elecon Engineering Co. Ltd. [1976] 104 ITR 510, on reference under the Income-tax Act, 1961. The assessee is a public limited company and the relevant assessment year is 1964-65. This was the second year of the assessee's new project at Vidyanagar going into production. On March 19, 1965, the Income-tax Officer computed the assessment under section 143(3) of the Act after determining the rebate admissible under sections 84 and 101 of the Act at Rs. 2,72,372. He reopened the assessment under section 147(b) of the Act and by his reassessment order dated November 29, 1966, recomputed the rebate at Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n proper interpretation of the relevant provisions of this rule would depend the ultimate conclusion to be reached. Sub-rules (1), (3) and (5) are relevant. They provide: " 19. (1) For the purposes of section 84, the capital employed in an undertaking or a hotel to which the said section applies shall be taken to be (a) in the case of assets acquired by purchase and entitled to depreciation (i) if they have been acquired before the computation period, their written down value on the commencing date of the said period; (ii) if they have been acquired on or after the commencing date of the computation period, their average cost during the said period ; (b) in the case of assets acquired by purchase and not entitled to depreciation (i) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputation period ", " depreciation " and " written down value " have been defined in sub-rule (6). The High Court is right in saying that the dispute has to be resolved by referring to sub rules (1), (3), (5) and (6) of rule 19. The High Court found that the value of assets entitled to depreciation under rule 19(1)(a) worked out to Rs. 40,10,947. To this figure was added a sum of Rs. 1,39,764 on account of depreciation as on January 1, 1963, as also on account of the average value of additions. The other assets were valued under rule 19(1)(b) at Rs. 44,38,126 as on January 1, 1963. All put together, the aggregate valuation came to Rs. 85,88,837. From this aggregate, deduction of a sum of Rs. 44,01,803 representing loans, other liabilities i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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